Go Effortless Energy to Exit the Market

Go Effortless Energy has triggered the formal process to exit the gas and electricity market, becoming the first supplier to fail during the coronavirus pandemic.

The Stoke-based supplier has informed the energy regulator Ofgem that it will enter the Supplier of Last Resort (SoLR) scheme, industry sources say. The mechanism will revoke the firm’s supply licence and assign its customers to a new supplier, selected by Ofgem.

The Supplier of Last Resort process is designed to ensure customers receive continuous service after their supplier goes bust. Go Effortless Energy customers are urged not to attempt to switch but to wait for contact from their new supplier. The SoLR process will protect their credit balances.

Go Effortless Energy, founded by husband and wife team Andrew and Melanie Burns, began supplying energy since 2014. Andrew Burns said he couldn’t comment until Ofgem made an announcement but said, “we would like to put our side of the story forward when the time is right.”

There are growing concerns that more energy suppliers will be felled by bad debts this autumn, as struggling households and businesses default on bills. 

Several suppliers told The Telegraph that they are seeing customers cancelling direct debits, an indication they are struggling to afford payments.

Which? consumer group found that furloughed workers are more likely to have missed bill payments, with 7% defaulting on energy, broadband or mobile phone payments.

As the furlough scheme winds down and ends on 31 October, and many lose their jobs, bill defaults are expected to become more frequent, saddling energy suppliers with high debts. Suppliers have committed to not cutting off customers during the pandemic.

Hayden Wood, chief executive of Bulb, said: "There is a strong risk that if there’s a second wave, if there’s really high unemployment that a large number of businesses in the UK will find it challenging with non-payment by customers.”

Suppliers which serve large numbers of business customers are particularly at risk, as many firms have temporarily shut, reducing their energy consumption, and others, particularly in the entertainment and restaurant sectors, are headed for permanent closure.

Elchin Mammadov, utilities analyst at Bloomberg, said: “Suppliers with a large share of industrial and commercial customers in their portfolio will suffer the most from the plunge in power use, the increase in working capital due to payment delays and the rise in bad debt.”

Ofgem has extended a £350 million bailout to weaker energy suppliers to ward off a string of bankruptcies. Under the relief scheme, these suppliers will be able to delay payments to the energy network companies which own and maintain the UK’s electricity and gas grids.

However, there are concerns that the rescue plan doesn’t go far enough, particularly in a market with thin margins which has seen 19 energy suppliers, including now Go Effortless, collapse since the beginning of 2018.

Prior to Go Effortless, the most recent casualty was small supplier GnERGY in March. Its 9,000 customers were assigned to Bulb.